Out of love with China, fashion factory moves west

PARIS (Reuters) - A string of countries on and around the fringes of western Europe are becoming new centers of fashion clothing manufacturing as China moves up the industrial value chain and brands discover adaptable suppliers closer to home.

Sourcing from China is getting more expensive, but it is still cheap, so a decision to go for Made in Morocco or Made in Moldova instead is not all about price.

This is an industry where fickle consumer behavior is the main driver of demand. Players have to be nimble to survive against heavyweights like Inditex's Zara, which can have a catwalk dress look-alike in its stores within weeks, and which already counts 60 percent of its offering as "close or nearby production" - Europe and nearby places.

"Of course it is more expensive for us to make things in Turkey and Tunisia than in China, but it is not that much more expensive considering how much salaries (in China) have increased, and it is much more convenient for us because it is closer, so we have more control over quality," La Perla designer Giovanni Bianchi told Reuters. The maker of fine lace underwear moved production of its mass-market Studio La Perla label to Turkey and Tunisia from China late last year, and has also moved sourcing of its nightwear from China to Portugal.

It estimates that for every 10 euros it spends in China on labor, for the same work, it pays 15-16 euros ($20-21) in Tunisia or Turkey - so China remains cheapest by its calculations.

But that is changing.

China's national wage index has been rising on average by 15 percent every year in the past five years. Institut Francais de la Mode, France's fashion trade group, estimates monthly pay in China's coastal areas soared to 400 euros in 2011 from 240 in 2005. That compares with current pay rates of 160 euros in Tunisia, 152 euros in Morocco, and 200 euros in Moldova.

And tougher manufacturing terms demanded by Chinese factories have also given fashion companies second thoughts about working with them. French Fashion houses Jean-Charles de Castelbajac and Barbara Bui, and ready-to-wear group Etam, have also recently moved part of their production closer to home.
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